Timeline to reopen facility unknown

Timeline to reopen facility unknown

A Williams Olefins plant manager said Friday company officials had “absolutely no idea” how long it will take to get the Geismar chemical plant running, while authorities investigate the cause of a massive Thursday explosion that killed two and injured more than 100.

Larry Bayer, Geismar plant manager, said company officials at this point were working with the Occupational Safety and Health Administration to understand what happened.

Bayer said after that investigation is finished, the company will conduct a damage assessment and put together a plan to repair the plant, which is on the southeast corner of La. 30 and La. 3115 in a heavily industrialized corridor along the Mississippi River.

“At this point, we really have absolutely no idea how long it’s going take to bring the plant back up,” Bayer said at a news conference Friday at the Ascension Chamber of Commerce in Gonzales.

Bayer said the company supplies BASF, CosMar and Total’s local plants and also makes ethylene sales to a number of customers in the Baton Rouge area.

When asked how the company planned to supply customers in light of the plant’s damage and shut-down status, Bayer said the company contracts with a third party for ethylene storage.

“To the extent that we’re able to work those companies from that storage, we will, and, uh, we’ll do the best we can to take care of our customers,” Bayer said.

The explosion and fire has caused higher ethylene prices, but analysts said it should not lead to production disruptions at other south Louisiana chemical plants.

Tison Keel Jr. and Chris Wheeler, analysts for IHS Chemical in Houston, a company that provides business data and analytics, said the temporary closure of the Williams Olefins plant will not create a critical shortage of ethylene or propylene.

“There’s a sophisticated and large network that interconnects all the chemical plants along the U.S. Gulf Coast,” Keel said. “In normal situations, companies are quickly able to move material around and pull things out of storage. There’s plenty of spare, immediately available ethylene.”

IHS Chemical said the ethylene capacity at Williams Olefins is 646,000 tons annually, which represents 2.4 percent of the U.S. total. The propylene splitter at the plant has a capacity of 270,000 tons, which represents roughly 1.4 percent of the U.S. total. Additionally, another 43,000 tons of propylene could be generated as by product from the steam cracker.

Williams Olefins has a storage well in Geismar with a capacity to hold roughly 450,000 tons of ethylene. As of the first quarter, IHS Chemical said the U.S. had an ethylene storage inventory of 442,000 tons.

Keel and Wheeler said at any given point in time, one or several U.S. ethylene plants could be out of production, on a planned or unplanned basis. In May, 11 percent of the U.S. ethylene production was offline because of the spring turnaround and maintenance season.

The spot price of ethylene shot up Friday. While the chemical was going for 52 cents per pound on Thursday prior to the explosion, Wheeler said the price was 60 cents per pound for the two transactions that happened Friday.

“It’s an emotional kind of deal,” he said.

Other than a short-term price increase for ethylene, Keel said there should be no major impact on operations at other chemical plants because of what happened at Williams Olefins.

All nonessential Williams employees were informed Thursday night not to show up for work Friday, but Bayer said they would be paid for their time.

Bayer said 21 employees and four contractors remained on-site Friday to monitor the plant. He said teams were working in shifts in the control room to finish shutting down the plant safely.

Bayer said the entire plant has been isolated, depressurized and “is approaching a very safe condition.”

When asked later about pay for contract workers not on the job, Bayer said the company would have to address that question “as time progresses.”

Shares of Williams were down 39 cents Friday, or 1.2 percent, to close at $33.31. Williams had been helped by higher margins for ethylene coming out of the Geismar plant. The company was wrapping up a $300 million project to boost the ethylene capacity at Geismar. That work was set to be finished at the end of the year, bringing the capacity to 926,000 tons annually.